The rising inventory and slowing sales have forced several automotive dealerships across the country to cut jobs in a bid to maintain profitability. If the situation continues, more dealerships would be going out of business. To make the matters worse, the revenue from the after-sales service has also witnessed a decline this year as customers spend less than before.
According to J.D. Power 2019 India Customer Service Index (Mass Market) Study, the average mount spent per service visit dropped by 10% compared to 2018. Last year, customers spent an average of INR 5,600 per service visit but this year, the figure dropped to INR 5,000. Notably, customers who are over 39 years old spent 17% less on car service compared to previous year.
This comes as a huge challenge to the dealerships as they generate 31% of their profits from after-sales service as against 25% from sales. With the overall profitability under immense pressure, most dealerships would be contemplating ways to cut costs.
The situation also warrants the dealerships to offer the best possible after-sales experience so as to retain customers and bring in new ones through word of mouth. Speaking of customer experience, according to JD Power survey for 2019, Hyundai tops the chart when it come to after-sales service satisfaction with 903 points out of 1000.
Tata Motors takes the second spot with a score of 870 while Mahindra claims the final spot on the podium with a tally of 863. This was followed by Toyota, Volkswagen, Ford, Nissan, Datsun. Surprisingly, Maruti Suzuki, the country’s leading passenger vehicle maker, finds itself at a lowly ninth spot among mass market brands with a score of 799. Only Honda and Renault have poorer ratings.
This year’s JD Power study found out that only 1% of the customers make use of digital channels (dealer website or manufacturer’s smartphone app) to booking a service. Majority of customers (81%) prefer an old-fashioned telephone call to the dealership to make an appointment while 14% of them show up directly at the service station.
The study also found out that 21% of customers prefer to wait at the service center as their vehicle is being serviced while the rest prefer to comeback later to pickup their vehicles. We do hope that this festive season provides the much needed relief to the auto industry.
